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A taxpayer may avoid liability for negligence under section
6653(a)(1) and (2) if he or she reasonably relied on competent
professional advice. United States v. Boyle, 469 U.S. 241, 250-
251 (1985); Freytag v. Commissioner, 89 T.C. 849, 888 (1987),
affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991).
Reliance on professional advice, standing alone, is not an
absolute defense to negligence, but rather a factor to be
considered. Freytag v. Commissioner, supra. For reliance on
professional advice to excuse a taxpayer from the negligence
additions to tax, the taxpayer must show that the professional
had the expertise and knowledge of the pertinent facts to provide
informed advice on the subject matter. David v. Commissioner, 43
F.3d 788, 789-790 (2d Cir. 1995), affg. T.C. Memo. 1993-621;
Goldman v. Commissioner, supra at 408; see Freytag v.
Commissioner, supra; Sann v. Commissioner, supra.
Reliance on representations by insiders, promoters, or
offering materials has been held an inadequate defense to
negligence. Goldman v. Commissioner, supra; Sann v.
Commissioner, supra; see Berry v. Commissioner, T.C. Memo. 2001-
311; Carroll v. Commissioner, T.C. Memo. 2000-184. Pleas of
reliance have been rejected when neither the taxpayer nor the
9(...continued)
commencing after July 22, 1998. Petitioners do not contend, nor
is there evidence, that their examination commenced after July
22, 1998, or that sec. 7491(c) is applicable in this case.
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